The Chinese state-owned chemical company Sinochem has entered into a 17.5-year binding liquefied natural gas (LNG) sale and purchase agreement (SPA) with Cheniere Energy. Under the deal, Sinochem has agreed to buy an initial volume of 0.9 Mt/year starting in July 2022, which will increase to 1.8 Mt/year. The petrochemical group will purchase the LNG volumes on a free-on-board (FOB) basis. The purchase price for LNG under the SPA is indexed to the Henry Hub price, plus a fixed liquefaction fee.
This announcement follows recent LNG supply contracts between US LNG producers and Chinese companies. In October 2021, the Chinese state-owned oil and gas company Sinopec signed two 20-year agreements with the US LNG group Venture Global LNG for a combined 4 Mt/year of LNG; one contract was for the supply of 2.8 Mt/year of LNG on a free-on-board (FOB) basis and the other for 1.2 Mt/year of LNG sold on a delivered at place unloaded (DPU) basis. LNG will come from the proposed 20 Mt/year (27 bcm/year) Plaquemines LNG export terminal in Plaquemines Parish, Louisiana (United States), that Venture Global is developing in two 10 Mt/year stages. A final investment decision on the LNG export terminal project is expected by the end of 2021, with a phased operational startup in mid-2023 and full operations by mid-2024. In addition, Venture Global signed a third LNG supply agreement with Unipec, the trading arm of Sinopec, to deliver 1 Mt/year of LNG from its proposed 10 Mt/year Calcasieu Pass LNG project in Cameron Parish, Texas (United States), over a 3-year period starting in March 2023. Calcasieu Pass LNG is currently under construction and expected to be commissioned in 2022.
In 2018, China became the world's 2nd largest LNG importer in the world behind Japan. LNG imports amounted to 90.5 bcm in 2020 (+12%). Australia is the largest LNG supplier (44%), followed by Qatar (12%) and Malaysia (9%).